On-line social networks strive to enroll as many members as possible. In most social networks, each member defines her own group of friends by compiling a list of friends or colleagues. Each individual typically has the ability to define the parameters governing her community of friends, such as who she wants to interact with, who she shares information with, who has access to her personal data and who to request as a friend or connection. Facebook, LinkedIn, MySpace and Orkut are examples of such social networks. Each person in a member's group of friends typically has her own set of friends, some of whom may overlap with others, and some which do not. Thus an individual and her group of friends (collectively referred in this document as a “micro-community”) can be unique to each individual. As a result, a social networking site may consist of millions of micro-communities, each of varying size and characteristics.
Membership is typically free at these sites, and advertisements and pay-to-participate games and applications are commonly used to monetize the sites. In some cases, a marketplace may also be provided to facilitate trading and commerce among sellers and subscribers. Such transactions are not conducted any differently than conventional online transactions, and are not unique to the social network construct.
While some on-line social networking sites may have upwards of 250 million users, these platform providers have not succeeded in monetizing this substantial traffic apart from conventional advertising. In fact, even the most successful sites (in terms of membership, page views, etc.) are still struggling to attain a break-even cash flow. Some of the challenges to monetize the subscriber base and traffic on these social networking platforms (“SNPs”) are summarized below in the context of the SNPs themselves, the subscribers (or members), and those looking to sell their products or services on the sites (“sellers”).
From the perspective of the SNPs, subscribers are inherently more demanding of privacy and place a premium on it thus limiting the aggressive advertising opportunities. Thus, gaining and maintaining subscribers' trust is very important and aggressive attempts to push products or services by those outside a subscribers micro-community encounters a high degree of skepticism and resistance. Moreover, the lack of transparency associated with on-line marketing and behavioral advertising push erodes trust and is generally not accepted by subscriber bases. In addition, the content and dialog on SNPs tends to be more social and less commercial such that conventional social etiquettes adhered to in personal interactions lead to diminished attention to or tolerance of commercial messages. Regarding applications implemented on SNPs, the SNPs receive little or no compensation for the use of applications developed for their platforms. These factors, and others, have made it difficult for SNPs to capitalize on the high trust inherent within a subscriber's micro-communities and translate it into a revenue opportunity or derive any benefit from activities and shared knowledge or habits of subscribers within a particular micro-community.
From the perspective of the subscribers, there is an inherent trust among members of her micro-community that is far greater than an outside advertiser, and members of a micro-community are often interested in similar products or services and share their experiences. While group buying sites like BuyWithMe and GroupOn allow for community buying, subscribers are more apt to share their experiences with members of their micro-community and trust recommendations and reviews from others in their community, as opposed to the general public. Moreover, the “deals” that are available on conventional group buy sites are determined by the merchants and the sites themselves (e.g., the “deal of the day”) as opposed to deals that are initiated and defined by members of the community itself. As such, subscribers cannot initiate a transaction for the products and/or services she desires when she needs it.
From the perspective of the sellers, conventional advertisements targeted at a micro-community are not effective because aggressive attempts to push products and services by those outside one's own unique micro-community encounters higher degree of skepticism and resistance. A lack of transparency associated with aggressive marketing/advertising push is generally not accepted by the subscriber base and the ROI for this type of online ad spending is questionable. Furthermore, sellers have no way to reach members of a micro-community if one member of that community had a positive interaction with an ad.
Therefore, what is needed is a new approach online advertising and selling products and services that takes advantage of the micro-communities inherent in social networks.